China's Cnooc considers investment in Uganda refinery, pipeline plan

Cnooc has expressed interest in investing in Uganda's oil refinery and a crude export pipeline. The Chinese company reportedly expressed interest in two projects following a meeting between company chairman Wang Yilin and Uganda's prime minister Amama Mbabazi.

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By NICHOLAS BARIYO

KAMPALA -- Cnooc has expressed interest in investing in
Uganda's oil refinery and a crude export
pipeline, as the east African nation prepares to develop its
fledging oil sector.

Uganda's presidency said in a statement that the Chinese
company expressed interest in the two projects following a
meeting between company chairman Wang Yilin and Uganda's prime
minister Amama Mbabazi, who is on a week-long state visit to
China.

Cnooc together with Tullow Oil and Total are in the process
of developing Uganda's oil fields in the Lake Albertine Rift
basin. Cnooc becomes the first company among the joint venture
partners to express interest in the two projects, since Uganda announced
that it would approve the construction of a smaller refinery and a crude export pipeline
more than two months ago.

The two projects are expected to cost more
than $6 billion, according to government estimates.

The Ugandan presidency quoted Mr. Yilin as saying that
Uganda's nascent oil and gas sector would "lay a better
foundation for other industrial efforts." A Cnooc spokeswoman
in Uganda couldn't immediately be reached.

Uganda agreed with the companies in April on the construction of a 30,000 bpd and a
crude export pipeline, breaking a nearly-two year impasse,
largely blamed for delaying the development of the country's
oil sector.

Tullow said that it had made "substantial progress" with its
partners and the government and expects to sign a memorandum of
understanding for the development of the country's oil
fields.

The three companies are expected to invest more than $12
billion to develop the oil fields, which are believed to
contain as much as 3.5 billion bbl of crude, with less
than 40% of the country's oil region explored so far.

"Our desire is not just revenues but achievement of the
strategic objectives of transformation, and we needed people
that could be reliable and trusted," Mr. Mbabazi, was quoted as
saying in the statement.

Mr. Mbabazi also held talks with executives from Sinohydro
Group Ltd, which is expected to construct Uganda's 600 megawatt
Karuma hydro power plant, at the Murchison Falls, on the River
Nile.

Last month, the Ugandan government awarded the construction contract for Karuma to
Sinohydro, paving the way for the commencement of the long
delayed project. Karuma is partly funded by
a Chinese concessional loan.

Dow Jones Newswires

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